APCO scathing of players behind regional Victorian fuel market and prices as inquiry continues

APCO company directors slammed the Coles/Woolworths duopoly, shopper docket schemes and the ACCC.
APCO company directors slammed the Coles/Woolworths duopoly, shopper docket schemes and the ACCC.

APCO Service Station directors believe people in the majority of regional Victorian towns pay less for their fuel compared to Melbourne, and have blamed discount docket schemes for destroying “what was once a strong and competitive market”.

The company’s three directors appeared at a state government inquiry into fuel prices in regional Victoria on Monday.

In its submission to the inquiry, Geelong-based APCO – which operates 25 service stations in regional Victoria, including two in Bendigo – believed that, on average, fuel prices in regional Victoria were lower than Melbourne.

“In larger metropolitan markets we operate under a competitive price cycle,” the submission reads.

“But in most regional Victorian areas, where there is no price cycle movement as such, we tend to remain at a steady middle of the road price.

“In metropolitan markets the cycle by its nature causes excessive highs and extreme lows in the retail price.

“If as a customer you were to average out your actual price paid over the cycle it would vary little to the regional areas where the price remains steady.”

APCO encountered criticism in Bendigo in early 2015 when it claimed that “ill informed” comments about fuel prices were heightening community angst against service station proprietors.

The company had previously been scathing of the Australian Competition and Consumer Commission for failing to crack down on shopper docket schemes.

The company blamed Coles and Woolworths for creating an uncompetitive market in regional areas via the dockets, which it said was causing independent players to go out of business.

“No matter what APCO’s price is on our board, no matter how low we drop our pump prices, we will never get the Coles/Woolies discount docket customer back, we can never win,” the submission reads.

“So why would we reduce prices unnecessarily for no gain in volume to offset the lower retail margins? What business that wants to stay in business would want to do that?”

The inquiry heard from the Victorian Farmers Federation, which was also critical of the lack of competition in the fuel retail and wholesale distributor markets.

The ACCC, in its submission, listed four reasons for higher fuel prices in regional areas: lack of competition, lower volumes of fuel sold, market location and lower convenience store sales.

APCO believed the ACCC’s models for measuring fuel prices failed to take into account independent players and were “misleading”.

The inquiry is expected to release its report in March next year before the government decides if it will accept its recommendations.